In our article we’ll concentrate on electronic industry, which is famous for its high competitiveness and low margins. Since e-commerce appeared and many stores fighted for a customer, using mainly lower price, the medium margin of equipment sales has lowered remarkably. Additionally a great popularity of price comparison websites enables customers to find the cheapest product.
So how to increase the profit margin? The answer is: to sell products that are unavailable at our competitors’ stores. It’s worth noticing that while analysing data from price comparison websites, some products are available only at 2-3 stores, whose owner is the same person. So we can talk here about colourable price competition.
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How to get such products ? You surely need to talk to the producer. There are some possible solutions:
- To sell products that are unavailable at our competitors’ stores
- To sell products, which were renamed and are available only for one shop.
- Unique variants of a product, for example: colours
The most difficult is to come to an agreement with the producer, regarding an individual model (point 1). It will surely require, even in the case of more expensive equipment, to order many thousands of items. It will be a little bit easier in the case of modifiable equipment, for example laptops. The producer can agree here to a unique configuration, even when we buy less products (1000 items). An interesting case is here a series of phones: Samsung Galaxy Sx Active, which at the beginning of sales are only available at one operator in Europe.
Another solution is the change of product name. Not all producers agree to such a solution, but if they do, it’s often possible already at the purchase of 1000 items. The product’s features are comparable then with identical solutions, however in the case of personal sales it’s easier to convince the customer to advantages of this ‘unique’ model.
When we already have in our offer a unique product, we can increase its price. Profit margins on such products are at least twice higher.
Manager with experience in leading team of software developers and testers during implementation of internal and external IT projects. Ceo of Brandly360.com.